Weekly Update – 25.11.2022

Weekly Update – 25.11.2022
November 25, 2022 Hannah Marshallsay

Covid cases continue to rise in China prompting more local lockdowns, but movement of cargo is still not being significantly impacted. Carriers continue to manage capacity to mitigate weakening global demand. UK train drivers to strike this weekend, while truck drivers in South Korea are to blockade ports in protests over pay.

Chinese Lockdowns Rise as Covid Cases Hit Record Highs

China is the last major economy still pursuing a Covid eradication process with mass testing and local lockdowns restricting the movement of people in many areas of the country. Covid cases are now being recorded in 31 provinces, and this week has seen the highest daily figure since the pandemic began. The unrelenting zero-Covid push has sparked sporadic protests and hit productivity, further depressing economic activity. 

Some of China’s biggest cities including Beijing, Shanghai, Wuhan and Xining currently have residential areas in lockdown. In Fuzhou, Fujian province, a Covid outbreak has forced a few factories to shut down. In Ningbo, Covid testing will now take place every two days. The central city of Zhengzhou is to enforce a lockdown for 6 million residents from Friday, officials have announced. In South China, Covid case numbers in the Guangzhou area continue to rise forcing more of the population into lockdown.

The violent protests at a vast industrial complex belonging to iPhone manufacturer Foxconn have been in the news this last week. The Apple supplier has imposed a ‘closed-loop’ system at the factory where its 200,000 staff live and work on site, isolated from the rest of society. Earlier this month Apple said it expected lower shipments of iPhone 14 models because of the disruption to production in Zhengzhou.

At the present time, none of the areas with restrictions imposed are having any significantly detrimental impact on supply chains. Although trade is complicated by ever-changing quarantine regulations and therefore localised supply chain issues may occur. We are not seeing any significant impact on cargo flows at the moment as daily operations at port terminals, warehousing and customs are running as normal. There may be challenges with trucking into and out of the areas which have travel restrictions imposed and individual factories closing, but at the present time we are not seeing any significant delays.

We will keep customers updated with any news of impact to the movement of cargo at the earliest opportunity.

Carriers Continue to Omit Sailings Despite CNY Approaching

The continued weakening demand for cargo has prompted carriers to omit further sailings with the aim of balancing capacity in the network. Due to the fall in global demand, we are not expecting to see the usual spike in demand in the run up to Chinese New Year this year. As Chinese New Year in 2023, falls earlier than usual on 22 January, there may be an incline in demand in December, but until this materialises, carriers will continue to omit sailings in order to manage capacity.

Truck Workers in South Korea to Blockade Ports

For the second time in a matter of months, truck drivers in South Korea are threatening major disruption across the supply chain and specifically targeting the country’s ports. In June this year, a nationwide strike caused chaos at major ports, with activity that brought the flow of key components in the tech industry to a standstill. On Tuesday this week, the Cargo Truckers Solidarity Union announced that the union had decided to resume the strike due to the government’s failure to increase the minimum wage since June. The Ministry of Land, Infrastructure and Transport responded by saying it was taking steps to lessen the impact of the latest walkout, warning a quick response if the drivers took illegal actions blocking shipments once again.

UK Rail Strike This Weekend to Bring Services to a Halt

Train drivers at 12 rail companies will be walking out tomorrow, the 26th of November, which is likely to cause travel chaos across the country. The action is likely to bring many rail services to a complete halt. Freight will be given priority over passengers, however some disruption to rail freight is inevitable. The RMT also announced this week further strike action for multiple dates over the Christmas period.

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